As the regulatory landscape shifts, lenders have become more concerned with EPC ratings and existing housing stock. How this is reflected in the context of valuations will need to be a key focal point for the sector.

Countrywide Surveying Services is embarking on an extensive review of our products and services through a sustainability lens. The role of property valuations in improving energy performance in homes has been explored further as part of this ongoing review. In a recent survey, we captured insight from our valuers on what the current landscape is in relation to EPCs, agent’s details and property valuations.

Energy efficiency in mortgage valuations survey

The results of the first survey on EPCs demonstrated a significant challenge which I am sure would resonate with many in the industry.

We received over 70 responses from expert valuers who are instructed to deliver mortgage valuations across the UK.

Responses clearly indicated that at this point in time the market is not reflecting energy efficiency and carbon emissions in agreed prices (95% responded ‘no’; 5% ‘yes’). The respondents highlighted no concrete evidence that energy efficient homes are valued more given that the market does not yet reflect energy efficiency, with other factors still being prominent in housing.

EPCs

There has been long standing discussion regarding the accuracy and quality of EPC. Our survey further demonstrates this as over 30% of the respondents consider EPCs as not accurate or reliable source or of high quality.

Valuers reported that an increasing number of EPCs do not correctly identify the property construction or are not reflective of a full inspection of the property.

Their accuracy is also undermined as often they are out of date with the homeowners already having carried out improvements or alterations and have not obtained a new EPC.

The quality of EPCs is often questioned as is the calculation methodology and the growing number of assumptions made to produce the report.

As environmental issues increase in prominence, there is an emerging need to look at alternative methods for assessing energy efficiency in homes.

Property features, market value and information from estate agents

The survey indicated that brown and green features ran quite low in terms of purchasers wish lists when buying a property.

However, valuers do note these in their valuation. When asked about green features, respondents listed solar installations as the highest feature (78%) followed by good double glazing (68%), heat pumps (54%) and efficient boilers (50%).

When we asked about key brown features and impact they have on market value, 22% responded that they have a negative impact on the valuation with poor glazing (72%) scoring as the highest brown feature noted when valuing a property.

Valuers do refer to the sales details when producing a figure and over 30% of the respondents highlighted that improved data and information from agents would impact the valuation.

Location, location, location?

Valuers responded that although features are noted, they have a negligible effect on value, if any, to most buyers. Other features such as house and garden size, number of bedrooms, general condition and location remain major features.

It is clear that more needs to be done by lenders, government and policy makers to offer extra incentives, rewards or penalties to tip the balance and attract home buyers to energy efficient homes as a prime feature.

Without doubt, we are becoming more aware of the impact our homes have on the environment. Buyers also recognise that an efficient home is going to be a cheaper home to run. Educating consumers on energy efficient homes should be a key aim for the industry.

The Royal Institution of Chartered Surveyors has recently published a guide to improve consumer awareness in reducing carbon footprint in existing homes. It offers guidance to homeowners considering retrofitting to make their home low carbon, and signposts other key sources of advice and financial assistance for making these changes. It is also useful for those looking to make their property greener before putting it on the market.

From our point of view, we will continue engaging with the sector and Rics to ensure our valuers have the tools and framework they need to accurately report on the market and deliver to the needs of our lender partners and customers.

This week, we convened an expert panel at our latest webinar which attracted 300 attendees from the housing sector to discuss discuss existing and new housing stock and the challenges and opportunities as we aim to move to a low carbon built environment.

Sustainability and climate change will continue to be centre stage for most of us. Although this presents us with a multitude of challenges and many hurdles to get over, it also comes with as many opportunities for us as an industry.

Ultimately, we all have a significant role to play in contributing positively to the environment.

Ana Bajri, is the senior technical manager – risk and compliance of Countrywide Surveying Services